China? Worry? Fogettaboutit?
In Putting China In Perspective, Follow The Money & Know Thy Enemy, we discussed what our role and China's are in the current global disequilibrium. More on Chinas current situation from Investor's Insight and Paul McCulley at PIMCO.
While it has not made the news in the United States, there is a rise in the number, intensity and size of demonstrations in China. China has 20 million people, moving from the country to the cities every year.
They must build the equivalent of a Dallas, Texas every month and a half. They have to find jobs, housing, services and infrastructure in a staggeringly short time. To fail to meet those expectations will create problems and more tensions.
Chinese banks are worse than bankrupt. The government banks have been making massive loans to insolvent and unprofitable state businesses for decades. They continue to do so because to allow them to fail would create massive unemployment.
Massive unemployment would create unrest in the cities and surrounding areas. Above all it would disappoint the rising expectations of a growing Chinese middle class. That would create more tension.
While the government of China has done an impressive job in managing the largest migration in the history of the world (some 200 million people have moved the country to the cities in the last 20 years), it has not been without cost.
There is an increasingly unwieldy top-down bureaucracy trying to keep things going along, while a freewheeling market economy is emerging. Freewheeling economies and top-down bureaucracies are not a prescription for stability.
More to come on the morrow in: Next Big Chinese Import? OPM
While it has not made the news in the United States, there is a rise in the number, intensity and size of demonstrations in China. China has 20 million people, moving from the country to the cities every year.
They must build the equivalent of a Dallas, Texas every month and a half. They have to find jobs, housing, services and infrastructure in a staggeringly short time. To fail to meet those expectations will create problems and more tensions.
Chinese banks are worse than bankrupt. The government banks have been making massive loans to insolvent and unprofitable state businesses for decades. They continue to do so because to allow them to fail would create massive unemployment.
Massive unemployment would create unrest in the cities and surrounding areas. Above all it would disappoint the rising expectations of a growing Chinese middle class. That would create more tension.
While the government of China has done an impressive job in managing the largest migration in the history of the world (some 200 million people have moved the country to the cities in the last 20 years), it has not been without cost.
There is an increasingly unwieldy top-down bureaucracy trying to keep things going along, while a freewheeling market economy is emerging. Freewheeling economies and top-down bureaucracies are not a prescription for stability.
More to come on the morrow in: Next Big Chinese Import? OPM
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